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TMI Blog2014 (11) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court] - no capital gains arises on the sale of agricultural land even though purchaser purchased the property with an intention of selling it for non-agricultural purposes - assessee's land was used as agricultural land and is away from GHMC limits beyond 8 KMs, the transaction does not give rise to taxable capital gains – Decided against revenue. - ITA. No. 729/Hyd/2013 - - - Dated:- 24-10-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Mr. Rajat Mitra For the Respondent : Mr. A. V. Raghuram ORDER Per B. Ramakotaiah, A. M. This appeal by Revenue is directed against the Order of the Ld. CIT(A)-V, Hyderabad dated 31.01.2013. The issue in the appeal is with reference to levy of capital gains on transaction entered by assessee on sale of agricultural land to M/s. Ramky Estates and Farms P. Ltd. It was the Assessing Officer's contention that transaction of GPA entered indicates that land was meant for commercial exploitation and did not have the character of agricultural land at the time of transfer. 2. Briefly stated, assessee purchased ac.30.00 gts of land at Survey No. 230, Srinagar village, Maheswaram Mandal on 22.08.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is that the land so conveyed to the vendee is an agricultural land and in support of the above, he has filed the copy of purchase deed and also the irrevocable GPA wherein it was mentioned that the transaction is in respect of agricultural land. The revenue records certify that-the land so sold by the appellant during the year is an agricultural land. The appellant at no stage applied to revenue authorities for conversion of his land as non-agricultural land. 5.2.1. As regards the view of the Assessing Officer that the appellant has spent ₹ 14.50 lakhs towards development of the agricultural lands, it was clarified by the appellant that the amount spent is not for development of the land but the same is towards ratification deed for the property purchased. The facts relating to this expenditure were explained that at the time of original purchase of land, one of the vendor, Sri K. Anand Rao was a minor and the lands were sold to M/s Vishwas Agro Plantations in the year 1993. The appellant purchased the land in the year 2002 from Mls Vishwas Agro Plantations. In the year 2006, the appellant the appellant got a ratification deed from the hitherto minor, Sri K. Anand Rao i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd others 204 ITR 631 the land in question has to be proved as agriculture land and relied on various principles stated therein to submit that assessee has not established that the land in question was agricultural land. On a query by the Bench whether the A.O. has examined whether any agricultural income has offered in earlier years, learned D.R. fairly admitted that this aspect was not examined by the A.O. at all. 5. Ld. Counsel however, contended that Revenue has come in appeal only on the reason that the purchaser meant it for use of commercial purpose and that does not take away the fact that assessee's land in question was not agricultural land. He relied on the decision of Hon'ble Madras High Court in the case of Mr. Srinivas Naicker and others vs. ITO 292 ITR 481 the proposition that purchaser could put the land for non- agricultural purpose was not relevant for allowing the exemption from capital gains on sale of agricultural land. He also relied on the decision of Hon'ble Delhi High Court in the case of Hindustan Industrial Resources Ltd., vs. ACIT 335 ITR 77 for the same proposition. He also relied on the Coordinate Bench decision in the case of Tulla Vire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out by the assessee. The assessing authority, in its order, states that the land was actually under cultivation till the date of sale. A perusal of s. 45 shows that the requirement as on the date of sale of transfer is that the asset must be capital asset, considering the description under the Act. The chargeability to tax under s. 45 arises only if on the date of sale, the land in question retained its character as a capital asset, which means, an asset, which does not answer the definition of a capital asset and which is an agricultural land would automatically be outside the scope of s. 45. It is no doubt true that the purpose for which the purchaser had purchased was totally different from what the transferor had intended to use the land in question but with the admitted finding that the lands in question were under agricultural operation on the date of sale for the purpose of considering the meaning of capital assets, it matters very little how the subsequent purchaser intended the land in question to be put to use. In the circumstances, there is no reason to accept the plea of the Revenue that the asset in question is a capital asset and it attracts levy of capital gains tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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